How Can a Donor Advised Fund Improve Your Charitable Giving?

Giving money to charity should be enjoyable and easy, not stressful and tedious.

A donor advised fund (DAF) administered by the Jewish Community Foundation, Inc. can lessen the burden on your annual philanthropy and, in fact, improve it in many ways, here's how:

• Centralize Your Charitable Giving of Today:

  
  

  • Let's say that in a typical year, you pay synagogue dues, you support a local nonprofit's capital campaign, and you donate towards your friend's fundraising walk for disease research, to name a few charitable gifts. Those are three separate checks you'd have to write or credit cards to process, three gift receipts to store for your tax records, and three different organizations you may have to vet to ensure they are all indeed qualified to receive donations.

    
    

  • Instead, a DAF with the JCF handles all of these scenarios for you:

    • You can add money into a DAF at any time and earn immediate tax benefits for the current calendar year.

    • You enter grant recommendations from your DAF, and the JCF vets each charity and sends checks on your behalf, drawing from your fund.

    • The JCF tracks your donations in your DAF over time and provides you with easy-access tax information every tax season.

      
      

• Plan for Your Future Charitable Giving:

  
  

  • A DAF allows you to plan for future gifts that you may be considering, such as:

    • Emergency gifts in support of unpredictable events such as hurricane recovery efforts or funding cuts

    • Building up for a larger, future gift, such as for a naming opportunity in a capital campaign

    • Giving at a certain life stage, such as saving money now to give away after your retirement, or adding to a fund currently that your children, grandchildren, or other loved ones would be able to use for their tzedakah in the future

      
      

  • Contributions added to your DAF can be invested in one of multiple investment portfolios that JCF offers through our investment manager, SEI.

    • Any growth in the value of your DAF through investments occurs tax-free.

    • Important note: Your DAF's value will fluctuate due to the daily changes in the underlying investment vehicles of your DAF's investment portfolio. For example, investments in equities tend to grow over the long run but generally have more risk of loss than bonds, and the JCF offers a money market account which is designed to remain steady.

      
      

• Gain Additional Benefits:

  
  

  • You can donate appreciated assets such as stocks, ETFs, or bonds (held for more than one year) into the DAF, and avoid capital gains taxes. Then, you can divide up the proceeds from the sale to DAF grants as you see fit. This is a savvy way to save on taxes while also not having to worry if a charity you support can handle the stock donation; or having to donate the assets when you're not sure which charities you want the sale proceeds to support but you do want to lock in your gains.

    
    

  • You can incorporate instructions for the JCF to follow after your lifetime to tell us how to handle any remaining balance in your DAF, such as using money to establish an endowment fund in your memory that will continue your annual giving to any designated nonprofit(s) you choose. There is no charge to incorporate these changes, and this process saves you from expensive updates to your will or estate plans.

    
    

  • You can give anonymously through your DAF, if desired.

    
    

  • You can avoid sharing your contact information with beneficiary organizations, if you prefer.

    
    

  • You can add any trusted individual(s) onto the DAF at any time if you want to enable your heir(s), professional advisor(s), or any others to be included on your DAF to coordinate giving on your behalf.

    
    

  • You can name designated individuals to inherit and manage your account after your lifetime, if desired.

Want to learn more about donor advised funds or ready to open your own?

The JCF is here to help. Please contact JCF Executive Director David Snyder at 856-673-2571 dsnyder@jfedsnj.org or Assistant Director Mike Staff at 856-673-2528 or mstaff@jfedsnj.org.